Direction of the new medium-term management plan

1. Review of the previous medium-term management plan

No.1<3562> has been promoting the medium-term management plan "Be a Platformer" (February 2021 period to February 2024 period). To achieve a transformation of the business model and expansion of the business domain, they have focused on 1) synergy effects with Alexon, 2) deepening solution sales (expanding stock revenues), 3) hard × soft (expanding information security fields), 4) developing cloud services, and 5) emphasizing mergers and acquisitions, business partnerships, and new businesses as critical strategies, aiming for sales of 1.3373 billion yen, operating profit of 1.28 billion yen, and EBITDA of 1.367 billion yen in the final year.

(1) Achievement of performance targets

With the exception of slightly missing the operating profit (and operating profit margin) due to the effect of upfront costs in the final year, sales, net income attributable to parent company shareholders, EBITDA, and ROE each exceeded the plan, and an high level of self-capital ratio was also maintained, so it can be said that we achieved almost the planned performance and financial results. The average annual growth rate over the four years was 11.1% for sales and 35.8% for operating income, resulting in significant business expansion.

(2) Results of key strategies

Regarding strategies, 1) through synergies with Alexon, Alexon's sales expanded significantly* and the lineup of network security products in line with the times also increased substantially. Also, 2) with regard to the deepening of solution sales, after starting to offer "No.1 Business Support" from September 2020, we steadily increased the number of contracts and sales, leading to the expansion of stock revenues. Regarding 3) expanding the hard × soft (information security fields), we sold products that corresponded to the telework during the corona disaster and the revised electronic bookkeeping law. On the other hand, with regard to 4) developing cloud-type services, we struggled somewhat with expanding sales of "Digitelas", but as previously mentioned, we were able to enter into a business alliance with Hyper and have prospects for expanding sales channels in the future. Regarding 5) mergers and acquisitions, business partnerships, and new businesses, we worked on joining Alexon's group in, business partnerships with SOICO, and establishment of a joint venture company with Credit Saison. Based on the above, it can be evaluated that a certain level of results were achieved regarding strategies.

*Alexon's sales increased from 2.8 billion yen (March 2020 period) to 4.7 billion yen (February 2024 period).

(Written by Fisco Guest Analyst Ikuo Shibata)